Hi everyone, I am looking to purchase my first park and needed some assistance in evaluating this potential deal.
The park is in the southeast region in a city with a population of around 55,000.
It has 9 tenant owned homes and 22 park-owned homes (3 of which are currently vacant and need some rehab).
Lot rents are currently only $120 but they are well below market rates which are between $200 - $250. Park owned homes currently rent between $400 to $600 depending on the size (mix of 1, 2 and 3 bedroom mobile homes in the park).
The park has city utilities that are paid by the tenants.
Gross income is around $108,000 and expenses are around $15,000 which seems to be on the low end and does not include management fees since the owner manages the park. To be on the safe side, expenses should probably be closer to $25,000 or $30,000 which would result in an NOI of around $78,000 to $83,000.
For the purpose of the cap rate analysis, I think $200 a lot would be reasonable rather than the current rate of $120.
After some preliminary negotiation, I managed to get the price down to $500,000. Bank financing would be available with 20% down. Is this something that I should be pursuing further?